Using Cash Transfer Programs to Get Children Back to School from Work

17 September 2021

Nasir Iqbal

#Inclusion #Education

The prevalence of child labour in Pakistan is very high: up to 22% of children between the ages of 5 and 14 years are engaged in the worst form of child labour, including bonded labour in agriculture and brick kilns, and forced domestic work. Many child labourers work under conditions of debt bondage, forced labour and suffer from extreme physical abuse and sexual assault. Families substitute schooling with child work to escape poverty, and in some cases, parents work with their children as bonded labourers.

Consequently, almost 22 million children between the ages of 5 and 16 years in Pakistan are out of school. According to the United Nations International Children’s Emergency Fund (UNICEF), this translates to about 44% of the total population within this age group. Thus, Pakistan has one of the highest rates of out-of-school children in the world. Elimination of child labour and the achievement of universal education are interconnected goals.

Poverty or financial constraint is an important factor that influences child labour and the deprivation of potential educational attainment. Over the last two decades, the Government of Pakistan has launched multiple social protection programs focused specifically on poverty reduction. The Benazir Income Support Program (BISP) is one of the largest cash transfer programs amongst these many strategies, targeting the very poorest segments of Pakistani society. BISP cash transfers seek to provide program beneficiaries with an additional income through which – it is assumed – the poorest households can be afforded a chance to decide whether to send children to work or school.

But on-ground evidence throws up intriguing patterns: although BISP transfers lead to increased enrolment amongst the ultra poor and grade promotion in the medium-to-long run, they yield no effect on school dropout in the short run. Disaggregated by gender, our findings show BISP transfers are equally important for improving education outcomes of both girls and boys in the medium-to-long term. But once again, impact is hard to see in the short run. In fact, more boys than girls are likely to be enrolled in the short term contributing to widening gender gaps as an immediate effect of the intervention.

One of the big lessons from these findings is that differences in parental preferences and altruism towards boys and girls can influence the dynamics around child labour and human capital development. The BISP intervention significantly induces grade promotion among boys but not among girls. Instead, females tend to be engaged into other household activities, leaving less time for schoolwork, hence promotion.

In other ways, too, girls in the treatment group (families that are recipients of a cash transfer) are more likely to participate in the labour market than boys their age in the short term. But in the long run, the effects of the BISP intervention demonstrate stronger outcomes for girls than boys, suggesting BISP beneficiaries do change their preferences from sending children to school instead of into the labour market. Yet what does not improve significantly is educational achievement amongst girls. So even though beneficiaries choose school over work for their girls, without making additional decisions to support a 12-14-year-old girl’s education – such as reduced domestic work – they inevitably continue to dampen female educational attainment.

If cash transfers like BISP can demonstrate positive effects on educational attainment and negative impacts on child labour in the long run, the following policy recommendations are worth considering:

  • BISP unconditional cash transfers (UCTs) program is an effective social strategy to promote schooling. However, the BISP experience also suggests that the effects of UCTs wane over time. Thus, it is unlikely that UCTs will sustain a linear relationship with education and child labour outcomes over a sufficiently long period. It may be useful to adopt hybrid cash transfer programming that minimises extensive costs involved in maintaining and enforcing conditions associated with conditional cash transfers (CCTs), while introducing conditionalities intermittently to ensure that the impact of UCTs extends over longer periods. For instance, even in the absence of binding conditions, UCTs are linked with very strong short-term effects. Thus, conditions can be introduced much later in the programme when the effectiveness of just transfers begins to wane.
  • The government can introduce a new cash transfer program with a priority focus on education. The program can include free education for all children in an eligible family up until their graduation. The educational expense, along with a stipend amount for each student, can be paid directly to educational institutions. Key beneficiaries of the program can therefore be enrolled children and youth, with females given particular priority.
  • A similar logic can be followed to allow cash-transfer-based social protection mechanisms to directly target highly exposed groups of children, including orphans as well as children from marginalized ethnic and economically/socially excluded groups.

Child labour is one of Pakistan’s most urgent challenges due to massive unemployment and poverty across the country. Designing social protection programs, which are child-sensitive - and in particular, child-labour sensitive - is needed to transition our kids out of work and back into education.

Nasir Iqbal, Associate Professor, Pakistan Institute of Development Economics (PIDE), Islamabad